If you're so certain, then start a hedge fund and put that delusional garbage in your literature and call me and tell me how it's working for you.
You are predicting that turning on the wipers will clear you windshield so you can see. You ACT because you are PREDICTING it will benefit you somehow. This doesnt seem like predicting because we pretty much know the windshield wipers will clear the window every time. But even this case is not guaranteed. You could turn on the wipers, and before the first wipe, a truck smashes into you and kills you instantly
Jimmy just made a really great analogy. The cycle of his life is such that, on a regular basis, he wakes up, gets a cup of coffee, gets in his car, and drives to work on a typical weekday. He knows that this cycle of events is going to CONTINUE to happen until he gets a signal for CHANGE. As soon as something happens that signals "change" in this cycle, like maybe a relative dies and he has to go to the funeral, he changes his immediate routine to accomodate this. After getting that phone call, the signal for CHANGE, instead he drives to the airport and gets on a plane to New York. Did he assign odds to these daily occurrences? Umm, no. He didn't sit there with a calculator and say I have a 90% chance of going to work and a 10% chance of my Aunt Sally dying of a stroke. And after he got the phone call, he didn't say, okay now I have a 99.9% chance of going to the funeral and a 0.1% chance of going to work. He just anticipated the continuation of the cycle until something told him otherwise, and then made the appropriate arrangements. If he got a phone call 20 minutes later saying that there had been a terrorist attack and all the airports had been shut down, he might decide to go into work anyway (he's not that beaten up over Sally, she forgot his last 4 birthdays). Call it predicting, anticipating, whatever the hell you want. It's just semantics. But what it really is is just responding to what the market tells you when it tells you, like you respond to events in real life.
You clearly have no desire to expand your horizons, and I have no problem with such a choice. However, once again (as you so often do) your example of obstanance provides the motivation others needed to think for themselves. I really cannot thank you enough. Please, keep on keeping on. With any luck, you'll provide another 'Aha!' moment for people to see. Once again, keep up the fantastic work. - Spydertrader
A good understanding of prediction in unconscious action. The only thing missing is the interesting distortions the brain creates when one is expecting continuation and it doesn't occur. Such an event might be ones mother dying or a market moving event - failure to perceive the occurrence, denial, anger, etc etc. ---------------------- The things people believe in are usually just what they instinctively feel is right; the justifications and arguments are the least important part of the belief. That's why you can win the argument, prove them wrong, and still they believe what they did in the first place. You've attacked the wrong thing. So what do you do? Agree to disagree. Or fight. - C. Zakalwe.
No my friend, what we are discussing here is extremely concious and comes from a lot of direct experience and applied knowledge. *** "Young describes how the child learns. He reaches out in a spontaneous act or in curiosity to feel some strange object. This is the instinctual starting place of learning, (I) thoughtless or unconscious action. If he touches a hot stove, he withdraws his hand instinctively in pain, (II) unconscious reaction. Next he observes the situation, reflecting on what has caused him pain. Eventually he makes the mental connection that signals an awareness of the situation, (III) conscious reaction. Finally he incorporates and applies that awareness to future encounters with stoves, exercising deliberate action or control, (IV) conscious action. Thus, there are four aspects in this learning cycle: (I) impulse, (II) feeling, (III) reason, and (IV) control or manipulation of physical reality. Through this cycle, the child acquires a conscious grasp of the world." from: The Theory of Process 2 The Theory of Process 2 by Jack Saloma A Selected Excerpt *** Jimmy Jam P.S. Thanks for taking the dialogue to this level. It's helping us to understand on the most fundamental levels why we do what we do, and why it works (but none of this knowledge is necessary to its application).
Lack of continuation, as you have described, is also called CHANGE. The event of the mother's death is also an event of CHANGE. This event of change, as I see it causes no "interesting distortion" unless the call you got about your mother's death was a prank call. Lucky for us, the market isn't "out to get us". If I have missed the point in what you were saying, please clarify.
Ah yes... When it rains, it pours. Mon ami! NONE OF THE ADDITIONAL CONDITIONS that YOU USED were in the original document either! For the Nth time, you can reread the document. You can search the document and look for any of the following phrases... The result that you will get is that none of the types of portfolios that you used were listed anywhere in the document. If you prefer a clearer explanations and/or illustrations, what you did is comparable to trying to pick a deadbolt door lock. If only a key can be used to open a door, then randomly choosing keys will not open the door unless one of your selections happens to be a key that fits the lock. However, until you find a key, you will not get the result you want (ie. an open door). Across all the variety of inputs you chose, did any provide a positive backtest (ie. opened the door to the bank). I would venture to say no because if one did, that would only lend credit to the document having any type of validity. SO, if none of the keys (ie."random" portfolios were baskets of stocks randomly selected from the set of all listed U.S. stocks and the S&P stocks were the S&P 400, 500, and 600 stocks and combinations thereof) opened the door to the bank, then clearly you did not find a type of KEY portfolio. So, to continue to locate the key, you would need to use a portfolio that you have not used with different conditions. This thread is turning out to be a great thread for looking at all the rational that a variety of folks can have and where the differences are and especially where reasoning flaws can occur. So to recap, we now see that you tried various portfolios with If they were, please inform of us of where they were so that we may change our backtest so that we may get the negative EQ curve that most traders do not prefer. As for... If the author of the original document makes no such mention of using the inputs you used, how is it that what you did was a measure of accuracy??? What we have now found out is that you did not use the KEY COMBINATION OF CONDITIONS that get you a preferable EQ curve... In laymans or T6 terms, please explain why what you did is a given that the author of the document did not make any recommendation of what you did...
When I said "thank you", I meant it. I can see now how traders should never predict when trading, but rather just simply, sit, wait, watch and take their trades when they setup. No prediction or anticipation required. Simple (major tongue-in-cheek ), but nevertheless, true. JJ
The backtesting has to specifically match the rules. I'm working with the Amibroker code and the results vary widely depending on what universe you run it on. It is designed to pick up trends following volume surges in low-float stocks. If you run it on stocks with heavy volume it bombs. In fact, you could design the backtest to fail just by picking the wrong stocks. Traveler